Microsoft Xbox exec sold more in stock than reported

Bach sold US$9M worth, not US$6M, before console's problems announced

The Microsoft executive in charge of the Xbox 360 sold US$3 million (AU$3.66 million) more in stock than originally disclosed during the weeks leading up to the July announcement that the flawed video game console was going to cost the company more than US$1 billion in repairs.

According to a filing published Tuesday by the U.S. Securities and Exchange Commission, Robbie Bach, president of Microsoft's entertainment and devices division, started selling shares May 1, not May 3 as reported earlier. The additional 100,000 shares -- one-third of the total he sold in several transactions between May 1 and May 30 -- accounted for US$3.02 million of the new total of US$9.17 million.

Microsoft explained the difference between what Bach actually sold in May and what was reported to the SEC as "an administrative error."

Bach's transactions were the subject of speculation because of the timing of their disclosure. Just over a week before the SEC posted details of Bach's stock sales, he had spelled out problems with the Xbox 360 to financial analysts and reporters. "Over the past couple of months, the number of repairs for the Xbox 360 console have been unacceptable to us," he said during a telephone conference call then. Bach announced an immediate two-year extension of the Xbox 360's warranty and said that Microsoft would take a charge of more than US$1 billion to pay for the anticipated repairs.

In the July call, Bach acknowledged that Microsoft had been aware of the problem for several months. "This set of issues wasn't visible at all for the first year and more," he said. "But the past couple of months, we've seen a significant increase in call volume, repair volume and attention from people."

"An administrative error led to the filing not being done within the required two-day period," said Microsoft spokesman Eric Hollreiser in an e-mail Wednesday. Under SEC rules, insider transactions must be submitted within two days of the sale. However, late filings are due only within 45 days of the end of the company's fiscal year. Microsoft's fiscal year ended June 30.

"Bach filed a Form 5," said Ben Silverman, director of research at InsiderScore, an insider trading intelligence service, talking about the form used to report late transactions. "Typically, the transactions disclosed on Form 5s include shares being gifted to a charity and acquisition of stock through an employee stock ownership plan," Silverman added. "It's less typical to see a buy or sale disclosed on such a form, but it does happen. Usually, we'll simply see a Form 4 filed late with a footnote stating that it's a late filing."

Microsoft's Hollreiser declined to give a timeline of when the company noticed its oversight, saying only, "We are in full compliance now."

In any case, Microsoft's share price was little affected by the news of the Xbox 360's failure rate and the associated US$1 billion in expenses. The day after the announcement, the price closed down just 2 cents. As of July 12, it had recovered to US$30.07, up 8 cents since the July 5 warranty change, though in the intervening month, it has dropped to Wednesday's close of US$28.27. Bach, meanwhile, sold his shares in May at an average price of US$30.57.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?